Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Tue, 2 Jun 2020, 9:57 AM

 

Wall Street Breakfast: Pressure On China

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China rhetoric is back in the spotlight as President Trump said the coronavirus "pain and carnage" that spread from the country "all comes from the top." "They could have easily stopped the plague, but they didn't!" he added, as S&P 500 futures slipped 0.8% in overnight action. The emergence of dozens of new coronavirus cases around the northeastern Chinese city of Shulan has also prompted worries as global coronavirus cases surpassed 5M. In U.S. economic news, today's weekly jobless claims could offer some early clues on how quickly businesses rehire workers and the success of the Paycheck Protection Program.

National People's Congress

China's top leaders are descending on Beijing as calls grow for an investigation into the government's handling of the earliest stages of the coronavirus pandemic. About 3,000 delegates to the annual gathering of China's largely rubber-stamp parliament will discuss political and economic policy after GDP contracted in the first quarter for the first time in decades. The meeting is especially of note as it is not yet clear whether "the Chinese economy can recover after this shock, given the expected restructuring of global supply chains," added Minxin Pei of Claremont McKenna College.

Listings at risk

Pressure on Chinese companies is building in the U.S. after the Senate unanimously passed the "The Holding Foreign Companies Accountable Act." Firms like Alibaba (NYSE:BABA) or Baidu (NASDAQ:BIDU) could be forced to give up their listings on American stock exchanges if they fail to comply with the U.S. Public Company Accounting Oversight Board's audits for three years in a row. The law applies to any foreign company listing or raising capital in the U.S., but China earned a specific mention.

Minutes & Powell

Minutes from the Fed's most recent policy meeting detailed a pledge by the central bank to act as "appropriate to support the economy," but also showed an evolving debate over how to signal intentions to keep rates low. One strategy would tie future plans to achieving specific economic outcomes (like the unemployment or inflation rate), while a complementary idea would cap long-term interest rates (think yield-curve control at the BOJ). Keep your eyes on the latest Fedspeak today as Jerome Powell speaks at 2:30 p.m. ET.

Supply deal for coronavirus vaccine

AstraZeneca (NYSE:AZN) has received more than $1B in U.S. funding to develop a COVID-19 vaccine with the University of Oxford and said it has supply agreements for 400M doses. The money came from the U.S. Biomedical Advanced Research and Development Authority, which has also provided funding for French pharmaceutical giant Sanofi (NASDAQ:SNY). AstraZeneca said it has a total capacity sourced for 1B doses through 2020 and into 2021, and continues to increase capacity further.

Next wave of coronavirus disruption?

Additional economic fallout may be seen from the coronavirus pandemic as automation is increased in the retail industry. Gap (NYSE:GPS) is speeding up its rollout of warehouse robots - which aren't susceptible to disease - after reaching a deal to more than triple its fleet to 106 by the fall. "Each machine handles work typically performed by four people," said Kevin Kuntz of global logistics fulfillment. "Our robotics systems, they never get tired. They never take breaks."
 

Japan seeks extradition in Ghosn case

U.S. authorities have arrested former U.S. Army Special Forces soldier, Michael L. Taylor, and his son, who were wanted by Japan on charges that they enabled the escape of former Nissan (OTCPK:NSANY) boss Carlos Ghosn. The cinema-worthy case saw Ghosn, who was charged with financial crimes, sneak onto a private jet in a large box normally used for musical equipment, only to turn up in Lebanon. "While not a party to these extradition proceedings," Nissan said it "reserves the right to take further legal measures as appropriate."

TikTok owner passes $100B private valuation

According to Bloomberg, the valuation of TikTok owner ByteDance (BDNCE) has risen to more than $100B in recent private share transactions, up from $75B during its last funding round two years ago. The sky-high number reflects expectations the company will keep pulling in advertisers despite the coronavirus storm. Some trades recently valued the Chinese company as high as $140B, but the private transactions might not reflect broader investor sentiment.

Wednesday's Key Earnings

Expedia (NASDAQ:EXPE) +4.4% AH highlighting cost saving measures.
L Brands (NYSE:LB) +0.9% AH despite sales tumbling 37%.
Lowe's (NYSE:LOW) +0.1% on home improvement boom.
Take-Two Interactive (NASDAQ:TTWO) -5% AH missing EPS estimates.
Target (NYSE:TGT) -2.4% as costs outweighed an online surge.

Today's Markets

In Asia, Japan -0.2%. Hong Kong -0.5%. China -0.6%. India +0.4%.
In Europe, at midday, London -0.8%. Paris -1%. Frankfurt -1.4%.
Futures at 6:20, Dow -0.8%. S&P -0.8%. Nasdaq -0.8%. Crude +2% to $34.17. Gold -1.1% to $1733.20. Bitcoin -4.3% to $9324.
Ten-year Treasury Yield -1 bps to 0.67%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:45 PMI Composite Flash
10:00 Fed's Williams Speech
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
1:00 PM Fed’s Clarida: U.S. Economic Outlook and Monetary Policy
2:30 PM Jerome Powell: "Fed Listens: How is COVID-19 Affecting your Community?"
2:30 PM Fed’s Brainard: "Fed Listens: How is COVID-19 Affecting your Community?"
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

 

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